Neither bulls nor bears are winning

NEW YORK » Stocks fell moderately yesterday as investors found little reason to extend a year-end buying spree.

The market is more than a month into a fourth-quarter rally that has started to feel halfhearted, with strong early gains in many sessions being whittled away by afternoon selling.

"I don't see a lot of people, just based on the volume we've had, betting on a bull market," said Ned Riley, chief investment officer of Riley Asset Management in Boston.

The only significant data expected yesterday was a mid-quarter business update from Texas Instruments Inc. after the close of regular trading. Data on petroleum inventories came in better than expected, but that didn't improve Wall Street's mood.

In late afternoon trading, the Dow Jones industrial average fell 45.95, or 0.42 percent, to 10,810.91.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.52 percent from 4.48 percent late Tuesday. The U.S. dollar was up against other major currencies in European trading. Gold prices set new highs in Europe for the second straight day.

Surprisingly strong weekly inventory numbers from the Department of Energy sent crude oil futures lower. A barrel of light crude was quoted at $59.21, down 73 cents, in trading on the New York Mercantile Exchange.

This is a market where neither the bulls nor the bears have the courage of their convictions, said John Caldwell, chief investment strategist for McDonald Financial Group, part of Cleveland-based KeyCorp.

"This is very much a shoot first and ask questions later kind of market," he said.

Caldwell is one of many strategists who doubted the strength and depth of stocks' fourth-quarter rally. One of their arguments: If this rally is just a case of Wall Street wish fulfillment, it could vanish in January.

Bear Stearns' strategy team said in a note this week, "The market is overbought, in our view, and, amidst a prolonged Fed tightening phase, it is difficult to see how leading indicators could continue to accelerate from here. If anything, it appears the market is setting itself up for a difficult start to the New Year."

The rally, Bear strategists said, "has more to do with sentiment than fundamentals."